The Third Mitigation Action Implementation Network dialogue in Bogota last week successfully built on and surpassed the first two dialogues we held in 2011. More than 70 participants from 8 Latin American countries (LAC), including teams of five policymakers from diverse ministries, came together to design policy actions, known as Nationally Appropriate Mitigation Actions (NAMAs) , to reduce greenhouse gases (GHG) and simultaneously produce sustainable economic benefits through improved mobility, reduced air pollution, and an overall better quality of life for citizens. Delegates were focused on developing policies that will produce real results, such as designing NAMAs to increase energy efficiency in the tourism and transport sectors, to expand the use of electric vehicles, to develop integrated strategies to reduce, reuse and recycle solid waste, and to provide incentives for expanded renewable energy use. Overall, it was an inspiring series of sessions, infused with incredible energy and enthusiasm.
Participants now have a good handle on what policy steps they want to take and what outcomes they are seeking. Nevertheless, the challenges lay in how to design financing structures that can leverage public and private sector investment and maximize the proverbial “bang for your buck.” A dedicated group of financing experts, commercial bankers, national development bank officials, and international development experts provided valuable reality testing for the policy actions being developed on the ground by the country teams. Take-home messages included:
- “Involve the financiers and private-sector players early in the design process so proposed NAMAs win financing support ”
- “There are multiple financing options – pick one that fits your situation ”
- “International dollars need to ensure that the underlying project or program can produce competitive returns for investors”
Some participants worried that the declining demand for carbon offset credits from Clean Development Mechanisms (CDM) could undermine private-sector interest in the new policy mechanism. The prevailing view, however, was that the private-sector players we are looking to involve in NAMAs are different from those who invested in the CDM. While CDM investors were mainly interested in carbon credits, the potential investors for NAMAs are interested in debt and equity stakes in the underlying venture. For example, a wind energy facility in Chile meeting the increased local electricity demands or mixed-use development projects around Bus Rapid Transit stations in Colombia designed to build transit ridership and decrease car use. As one commercial banker stated, “Chile’s renewable price stabilization proposal will stimulate new investments in renewables while the CDM only put some icing on a cake that was already baked.”
While LAC teams focused on designing bankable policies, the additional challenge is lining up bi-lateral funding, contributions from developed countries to support the implementation of NAMA policies. Currently, CCAP is collaborating with a range of public investors to support these efforts. Environment Canada is the newest player, committing nearly $1.2 billion to support NAMAs through the IADB, IFC, the CCAP MAIN initiative and other venues. Agence Francaise de Developpement has stepped up as well – earmarking at least 50% of all of its annual foreign assistance for climate initiatives. Norway has announced a new $1.8 billion Energy+ initiative targeted to renewable and expanded access to energy for citizens. And, the UK has committed 2.9 billion pounds sterling to further climate policy investments through 2015. Germany’s path-breaking International Climate Initiative (ICI) is looking to announce new support for 2013 for the direct implementation of NAMAs by developing countries. ICI has provided extensive NAMA capacity building to developing countries as well as support for efforts by NGOs to assist NAMA development projects, such as our MAIN project and the WRI initiative on Monitoring Reporting and Verification (MRV).
However, further steps and commitments are needed to scale up the NAMA effort and take advantage of the great energy and effort evidenced in Bogota last week. While the Green Climate Fund (GCF) offers a potential long-term answer, there is an immediate need for concrete, on-the-ground examples of successful jointly-financed bi-lateral policy initiatives, which leverage private sector investment and produce tangible benefits for citizens.
Finally, to cement the successful NAMA pilot projects, we need a concerted effort to monitor, report, and verify the results. That effort needs to go beyond traditional emission reduction measurement approaches to include the definition of additional sustainable development metrics that speak to both the funders in the German Bundestag or British Parliament, and to the local policymakers in the Colombian Congress or Mexican Congress. To ensure the long-term viability of climate policies in developing countries, the results must be reported in terms not only of GHG reductions but also of reduced congestion, improved health, and expanded economic benefits that political leaders and the public see as desirable.
After 15 months of the MAIN effort, we feel we are truly seeing developing countries in Latin America energized and making progress toward enacting new policies that produce multiple benefits. We also see developed countries beginning to step up to the challenge of providing promised financial, technical and capacity support. Bringing those two trends together in the form of actual new policies financed and implemented in leading developing countries in the next 18 months will be the ultimate litmus test for the MAIN initiative and the new NAMA mechanism.